Ghana’s Bonds Rebound as Nation Seeks Alternatives for Financing

(Bloomberg) -- Ghana’s bonds rebounded Thursday after the West African nation’s government said it will take a break from selling Eurobonds and instead use other methods of borrowing to finance next year’s budget.

The yield on dollar bonds maturing in 2032 fell almost 26 basis points to 10.87% by 10:40 a.m. in London, after soaring 91 basis points on Wednesday on news that Ghana’s overall 2021 fiscal gap will be wider than forecasts. 

“Our spreads have widened and for that reason nobody will go to the market as a country to borrow because the rate will be too high,” Minister of State in the Ministry of Finance Charles Adu Boahen said on the Accra-based Citi FM radio station Thursday. “If next year these conditions remain, we will not go to the market.”

Ghana, West Africa’s second-largest economy, intends to raise as much as $750 million from international sources in 2022. It will pursue syndicated loans and borrowing from bilateral sources to avoid high costs on international markets, Adu Boahen said.

Finance Minister Ken Ofori-Atta said in his budget speech Wednesday that the fiscal deficit including financial sector and energy sector legacy costs will be 12.1% of gross domestic product in 2021. That’s up from the ministry’s revised target of 10.6%, Michael Kafe and Andreas Kolbe, emerging markets analysts at Barclays Bank Plc, said in a note to clients.

“While some risk remains, we believe the market has overreacted and see a buying opportunity,” they wrote.

The yield on Ghana’s longest-dated bonds, due in 2061, dropped 24 basis points to 11% after jumping 51 basis points yesterday.

Ghana targets reducing the budget shortfall to 7.4% of GDP next year.

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